Warner Bros. Wins Blockbuster Victory in Legal Battle for Superman

UPDATED: An appeals court finds that Jerome Siegel's heirs made a deal with the studio in 2001 over rights to Superman.

An appeals court has delivered a huge victory to Warner Bros. that will likely allow the studio to control the future of the Superman franchise.

On Thursday, the 9th Circuit Court of Appeals decided that a lower court was wrong to deny Warner Bros. subsidiary DC Comics' contention that it had a deal in 2001 with the estate of Superman co-creator Jerome Siegel. As a result, a federal judge's 2008 ruling to allow the Siegel estate to recapture Superman rights is about to be wiped out.

The decision follows a ruling by a federal judge in October to deny the estate of Superman's other co-creator Joseph Shuster the ability to recapture its own portion of the Superman copyright. That was another win for Warner Bros.

Together, the decisions mean that Warners can exploit the Superman franchise without fear of substantial legal hassles from the estates of Shuster and Siegel. That's significant because Warner Bros. is preparing to release this summer's big-budget Man of Steel, directed by Zack Snyder and produced by Christopher Nolan.

"This is a great day for Superman, for his fans, for DC Entertainment and for Warner Bros.," a rep for Warners says in a statement. "Today’s ruling vindicates DC Comics’ long-held position that it entered into a binding agreement with the Jerry Siegel family in 2001. The Court’s decision paves the way for the Siegels finally to receive the compensation they negotiated for and which DC has been prepared to pay for over a decade. We are extremely pleased that Superman’s adventures can continue to be enjoyed across all media platforms worldwide for generations to come."

The estates of Superman co-creators Siegel and Shuster have spent years attempting to exploit the "termination" provision of the 1976 Copyright Act, meant to give artists who handed their rights over without much bargaining power at the early stages of their careers another bite of the apple by allowing them to recapture rights. Superman was first created in comic form in the 1930s when the artists were struggling financially. Famously, they handed over rights for little compensation and have been in and out of courts and negotiating tables for more than 70 years.

Marc Toberoff represented the estates and gained what at the time was a great victory in 2008 when a federal judge ruled the Siegels had successfully recaptured copyrights to some -- but not all -- of Superman’s defining characteristics, such as his costume, Clark Kent identity and his origin story, as described in the first editions of Action Comics.

But Warners has long contended that it had a deal in place with Siegel's widow in 2001 when Toberoff allegedly interjected himself and caused the Siegel family to walk away from the negotiating table. It was further alleged that Toberoff had made this happen by promising the heirs money while grabbing for himself a financial stake in the future reclaimed exploitation of Superman.

The argument came as a counterclaim to the Siegels' attempts to terminate rights. In May 2010, DC also brought a lawsuit against Toberoff personally for allegedly tortiously interfering with their rights and re-echoed those arguments.

In reaction to the lawsuit, Toberoff said that it was a "smear campaign," that after years of legal successes, Warners had filed a "baseless lawsuit." In court, Toberoff brought a challenge that was grounded on the anti-SLAPP statute, the law that guards against litigation meant to interfere with someone's First Amendment rights -- in this case, according to Toberoff, he and his clients' right to petition.

On Thursday, the 9th Circuit accepted Warners' position about what happened in 2001 between DC and Laura Siegel Larson. The decision was based on a review of a letter from Larson's then-attorney to the studio that reviewed terms of a proposed settlement over Superman rights. The question was whether the letter's words had created an enforceable contract.

According to today's decision, "We hold, as a matter of law, that the Oct. 19, 2001, letter did constitute such an acceptance. The Oct. 19, 2001, letter itself plainly states that the heirs have 'accepted D.C. Comics offer of Oct. 16, 2001, in respect of the 'Superman' and 'Spectre' properties. The terms are as follows ...'"

The appeals court has reversed the lower court's decision to grant summary judgment to the Siegel heirs and has remanded the case back down to reconsider the counterclaims.

In a separate decision, the appeals court also addressed the tortious interference lawsuit against Toberoff. In what constitutes another victory for Warner Bros., the appeals court says that a district judge was right to deny Toberoff's anti-SLAPP motion.

"The district judge properly held that DC's claims were not 'based on' defendants' protected activity," ruled the 9th Circuit. "DC's fourth and fifth claims arise from the heirs' repudiation, at Toberoff's apparent urging, of their agreements or economic relationships with DC."

As a result of the decision to find as a matter of law that there was an enforceable contract in 2001 between DC and the Siegel estate, a judge upon remand will likely determine that the agreement waives the Siegel estate's rights to terminate. After all, in October, a federal judge denied Shuster's heirs the opportunity to recapture their portion because a 1992 agreement with Jean Peavy, the sister of Shuster, precluded the attempt.

Warners is represented by Daniel Petrocelli and a team from L.A.'s O'Melveny & Myers.

Toberoff hasn't yet responded for comment. An appeal to the U.S. Supreme Court is an option.